Amazon's algorithm doesn't always show the cheapest price: study

A study has found Amazon’s algorithm does not always show the cheapest price. Photo / 123RF

Amazon has built a reputation for cheap, reliable online shopping, delivering three million packages a day around the world.

But something's up with the retail giant's pricing algorithm: while it's supposed to show you the cheapest deal when you search for a product, lately things are not so simple.

A new study suggests that the algorithm may be skewed in favour of Amazon products and partners, rather than bringing up the best deal.

The analysis by ProPublica, a public interest journalism not-for-profit, found that relying on Amazon's buy box - the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts - would end up costing almost 20 per cent more than hunting down the cheapest option.

"The costs of simply buying the algorithm-selected choice can add up," the researchers wrote.

"The average price difference between what the program recommended and the truly cheapest price was $10.40 ($US7.88) for the 250 products we tested.

"An Amazon customer who bought all the products on our list from the buy box would have paid nearly 20 per cent more - or about $1847 ($US1,400) extra - than if they had bought the cheapest items being offered by other vendors."

The authors found that, almost three-quarters of the time, Amazon would place its own products or those of partner companies into the buy box, even though they weren't necessarily the cheapest. The majority customers end up clicking "add to cart" and buying the product seen in the buy box.

Shoppers can compare product prices using an Amazon feature that ranks sellers of the same item by "price + shipping", but the company gives itself an advantage by leaving out the shipping costs for its own products.

So the rankings are only accurate for those who are members of Amazon Prime members, which includes unlimited "free" shipping for $99 per year, or those spending more than $49 in one transaction.

If a customer is solely looking for the lowest price available, we clearly alert them on the product detail page that lower prices may be available from other sellers.

Amazon said in a statement that its sorting algorithms were designed for products with free shipping.

"With Prime and Super Saver Shipping (which requires no membership and ships orders above $49 for free), the vast majority of our items ordered - nine out of 10 - can ship for free," the statement said.

It said that price was just "one component of being customer centric", with delivery speed being a major factor in Amazon's appeal.

"If a customer is solely looking for the lowest price available, we clearly alert them on the product detail page that lower prices may be available from other sellers".